A recent Full Federal Court decision has raised several important issues relating to trade marks in Australia.

The first is whether trade mark use (to defend a non-use removal application or otherwise) requires some consent or knowledge of the trade mark proprietor (or its licensee) where, for example, the goods have been imported into Australia by a third party. Surprisingly, the issue had not been the subject of any decision in the UK or in Australia.

The second is whether beer and wines are “goods of the same description”. Again, there had been no direct decision on this point in Australia although the view perhaps was that they were not.

The third is the issue of when an order to remove a trade mark registration (eg for non-use) takes effect. Again, there had been no decision on this point to date under the 1955 Act or the 1995 Act and the issue is potentially of importance to infringement up until the date of removal.

This appeal to the Full Federal Court of Australia and cross-appeal involved a dispute between a large American wine producer, E & J Gallo Winery (“Gallo”) and the Australian company, Lion Nathan Australia Pty Ltd (“Lion Nathan”) which is engaged in the production and sale of alcoholic beverages. Gallo is the registered owner in Australia of a trade mark BAREFOOT in relation to wines. Lion Nathan had sold in the Australian market since January 2008 a specialty beer using the trade mark BAREFOOT RADLER. Gallo alleged secondary infringement under s 120(2) of the Trade Marks Act 1995 of its registered mark. Lion Nathan contested and also applied for the removal from the Register of Gallo’s BAREFOOT mark on the basis of non-use.

Gallo’s predecessor imported wine bearing the trade mark BAREFOOT to Germany in 2001. In 2002, an Australian company, Beach Avenue Wholesalers Pty Ltd (“BAW”) imported into Australia a small number of bottles of wine from the German stock and sold them in Australia during the period from 7 May 2004 to 8 May 2007, the non-use period for the purposes of the proceedings.

There was no evidence that Gallo or its predecessor knew of the importation and sale in Australia.

At first instance, the primary judge found that there had been non-use of Gallo’s registered trade mark and accordingly ordered its removal from the Register. Further, His Honour determined that the order should operate from the date of judgment, namely 27 June 2008. As Lion Nathan began using the mark BAREFOOT RADLER in January 2008, it had potentially infringed Gallo’s registration for the BAREFOOT mark. His Honour concluded that Lion Nathan’s BAREFOOT RADLER mark was deceptively similar to Gallo’s BAREFOOT mark, however, found that Lion Nathan had not infringed Gallo’s registered mark. His Honour accepted Lion Nathan’s defence that it’s actual use of the mark BAREFOOT RADLER was not likely to deceive or cause confusion deciding that any such confusion would be removed when the two products were displayed and stored separately (for example) in a liquor retail outlet.

On appeal, Gallo challenged the primary judge’s conclusions about whether and from when the registered BAREFOOT trade mark should be removed from the Register for non-use and whether there had been infringement of the registered trade mark by Lion Nathan.

As to non-use, the Full Court found that the relevant questions as formulated by Gallo was “whether, when a registered trade mark is used in Australia on, or in physical or other relation to the goods, which are offered for sale and sold here but manufactured overseas by an owner or authorised user of the mark who applied the mark to them, the use of the mark constitutes use by the owner, even though the person may not know that the goods being offered are sold in Australia but rather sold them to a foreign distributor for re-sale without any limitation on where they might be resold”.

The Full Court, referring to Estex Clothing Manufacturers Pty Ltd v Ellis & Goldstein Limited (1967) 116 CLR 254, found that in order for there to be use in Australia of the mark by the owner, the owner of the mark must have knowledge of the use of the mark in Australia. No authority of which the Full Court was aware suggested “that inadvertent, unknown and unintended use in Australia results in ownership of the mark for the purposes of registration under Australian law”. Consequently, the Full Court found that the primary judge was correct in concluding that Gallo had not used the BAREFOOT mark and that the mark should be removed from the Register.

With respect to the date of removal, the Full Court found that the power conferred on the Court to order the Registrar to remove the mark from the Register is a power exercisable at the end of the proceedings. The order could only operate prospectively which meant that the removal of the BAREFOOT mark from the Register could only be effective from the date of the order for removal being made on 27 June 2008. This meant that Lion Nathan had prima facie infringed Gallo’s registration for the BAREFOOT mark during the period from 1 January 2008 to 27 June 2008.

As to infringement, the Full Court found that beer and wine were goods of the same description for the reasons including that they were both alcoholic beverages and generally distributed by the same major wholesale distributors; beer was intended to be an appealing alternative to wine and in developing the product, Lion Nathan deliberately set out to attract people who did not drink beer; producers of alcoholic beverages are no longer confined to the production of beer, as opposed to wine; large producers of alcoholic beverages now produce a range of products and market themselves as so doing; and wine and beer are now frequently distributed by the same retailers. The Full Court argument, in support of the above finding, however, referred not only to objective criteria but also the subjective intentions of Lion Nathan.

The Full Court found Lion Nathan’s BAREFOOT RADLER mark to be deceptively similar to Gallo’s BAREFOOT mark notwithstanding the inclusion of the word “RADLER” in Lion Nathan’s mark and noted that the word “BAREFOOT” remained prominent and there was “an obvious and clear link between that word and an imperfect recollection of Gallo’s registered BAREFOOT mark such as to be “likely to deceive or cause confusion”.

The Full Court also held that Lion Nathan’s “defence” in s. 120(2) (namely that a person is not taken to have infringed the trade mark if the person establishes that using the mark as the person did is not likely to deceive or cause confusion) did not apply. The Full Court noted that the words “as the person did” in the subsection direct attention to “the way in which, as a matter of fact, the alleged infringer used the allegedly infringing mark,” further noting that “an affirmative answer to the question of whether the alleged infringing mark was deceptively similar would be the starting point”.

For further information please contact Victoria Huntington at victoria.huntington@sprusons.com.au